Tata Motors net debt reduces by 20 percent

Indian auto company Tata motor’s consolidated net debt of Rs 27, 086.49 crore as of March 31, 2010 is reported to have come down to Rs 21, 479.90 crore, there-by reducing  20% of the total debt amount during the fiscal year 2010-2011. The amount is believed to have been generated from the institutional buyers and conversion of foreign securities. The company’s Annual report of 2010-2011 had showed that the Tata Motors owes a net debt of Rs 27, 086.49 crore.

Tata Motors has reportedly said that the significant reduction in the net debt amount is mainly due to the improvement in the operations, Rs 3, 249.80 recovered from Qualified Institutional Placement and another Rs 1490.25 crore gained from the conversion of Foreign Currency Convertible notes. The Jaguar Land Rover also stands at a debt of 233 million which amounts to approximately Rs 1, 680 crore. Tata Motors has informed that the JLR has taken necessary steps to reduce the risks that may confront them due to the fluctuations in the foreign exchange and ensuring long term funding facility to strengthen their capital structure.

The net debt of the Tata Motors alone is Rs 13, 898.90 crore against last year’s Rs 14, 930.96 crore as per the Annual report of 2010-2011. The report also shows an improvement from 4.28 to 1.71 in the debt equity ratio. The consolidated gross debt of Rs 35,108.36 crore as of 2009-2010 fiscal year, that includes the secured as well as the unsecured loans, has come to Rs 32,791.41 by the end of 2010-2011 economic year. Subsequently, the net interest cost has also come down by 8.67 %, from Rs 2,239.71 crore to Rs 2,045.42 crore of 2009-2010 fiscal years.

Due to the improvements in the operations, the company is able to contain the costs through lessening the interest rates on the borrowed amount by substituting part of the borrowings through issue of equity. According to the reports the Annual report of 2010-2011 financial year states that the net cash generated from the operations was Rs 11,240.15 crore against the Rs 8,997.13 crore from the previous fiscal year. Tata Motors has reportedly assured that the company will take the necessary action to raise the long-term resources required for funding in order to optimize loan maturity profile. The Tata Motors has revealed that during the fiscal year 2010-2011, the sales grew by 33.1 % to Rs 1,23,133.30 crore.

Some of the famous hatchbacks offered by Tata Motors are Tata Nano and Tata Indica. The Tata SUV and MPV segment has include Tata Sumo, Tata Safari, Tata Spacio and Tata Aria. Tata Motors offers Tata Manza and Tata Indigo in the sedan segment cars.